Tesla slashes prices on its popular Model Y electric crossover to reduce its record-high inventory surplus, following a production surplus of 46,561 vehicles in Q1 2024.
Prices for the rear-wheel-drive Model Y drop by $4,600, while the Long Range and Performance models see $5,000 cuts. With the $7,500 Federal EV Tax Credit, prices start at $33,890, $37,490, and $40,690 respectively, with a bonus of three months of free Full-Self Driving beta included.
Tesla attributes its global sales decline to factory shutdowns in Germany and transitioning its Fremont plant for the upgraded Model 3, though analysts question this explanation, as reported by Bloomberg.
The difference between the number of vehicles Tesla built and sold in the quarter “dispels the notion that 1Q deliveries were somehow supply rather than demand constrained,” Ryan Brinkman, a JPMorgan Chase & Co. analyst who has the equivalent of a sell rating on Tesla stock, wrote in an April 3 report.
Brinkman cut his price target for the shares to $115 from $130 and lowered estimates for first-quarter revenue and earnings per share. He now projects Tesla will report a $1.3 billion free cash outflow, rather than a more than $300 million inflow, due to an expected record increase in finished goods inventory.